Section 501(c) of the Internal Revenue Code provides for the exemption from federal income tax of certain types of non-profit organizations. Each subsection, from 501(c)(1) to 501(c)(29), outlines specific requirements and purposes for which an organization can qualify for tax-exempt status. Below, we explore some of the most common and significant 501(c) designations.
501(c)(3)
Charitable, Religious, Educational, Scientific, Literary, etc. Organizations
These organizations are formed for purposes such as charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. They are perhaps the most well-known type of non-profit. A key benefit is that contributions made to these organizations are generally tax-deductible for donors. However, 501(c)(3) organizations are strictly prohibited from participating in political campaigns for or against any candidate for public office and are subject to limits on lobbying activities.
501(c)(4)
Civic Leagues, Social Welfare Organizations, and Local Associations of Employees
Organizations exempt under 501(c)(4) are operated exclusively for the promotion of social welfare. This includes civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees. While they can engage in lobbying and issue advocacy to a significant extent, their primary purpose cannot be political campaign intervention (i.e., supporting or opposing political candidates). Unlike 501(c)(3)s, donations to 501(c)(4) organizations are generally not tax-deductible as charitable contributions for donors.
501(c)(5)
Labor, Agricultural, or Horticultural Organizations
This category includes labor unions, agricultural groups, and horticultural organizations. Their primary purpose is to better the conditions of their members, improve the grade of their products, and develop a higher degree of efficiency in their respective occupations. No part of their net earnings can inure to the benefit of any private shareholder or individual. These organizations often engage in collective bargaining, educational programs, and advocacy for their members' interests.
501(c)(6)
Business Leagues, Chambers of Commerce, Real Estate Boards, Boards of Trade
These organizations are not organized for profit and no part of their net earnings inures to the benefit of any private shareholder or individual. They are formed to promote the common business interests of their members. Examples include local chambers of commerce, industry-specific trade associations, and professional football leagues. They can engage in substantial lobbying and political activities related to their common business interests. While membership dues may be deductible as business expenses for members, contributions to 501(c)(6) organizations are not considered tax-deductible charitable contributions.
501(c)(7)
Social and Recreation Clubs
These clubs are organized for pleasure, recreation, and other nonprofitable purposes. They must be substantially supported by dues, fees, and charges paid by their members. Examples include country clubs, golf clubs, and college fraternities/sororities. A key requirement is that no part of their net earnings can inure to the benefit of any private shareholder, and they are restricted in the amount of income they can receive from non-member sources.
501(c)(8)
Fraternal Beneficiary Societies, Orders, or Associations
These organizations operate under the lodge system (a parent organization with local branches) and provide for the payment of life, sick, accident, or other benefits to their members or their dependents. Membership is typically based on a common tie or the pursuit of a common object, and they often have a fraternal purpose. Examples include the Knights of Columbus or the Benevolent and Protective Order of Elks, which offer both social aspects and member benefits.
501(c)(10)
Domestic Fraternal Societies, Orders, or Associations
Similar to 501(c)(8) organizations, these are domestic fraternal societies, orders, or associations operating under the lodge system. However, a key distinction is that they do *not* provide for the payment of life, sick, accident, or other benefits to their members. Instead, their net earnings are devoted exclusively to religious, charitable, scientific, literary, educational, and fraternal purposes. Examples often include Masonic lodges or other fraternal organizations that focus purely on community service and fellowship without offering insurance benefits.
501(c)(19)
Posts or Organizations of Past or Present Members of the Armed Forces
This category includes veterans' organizations, their auxiliary units or societies, and trusts or foundations for such posts or organizations. To qualify, they must be organized in the U.S. or its possessions, and have specific membership requirements (e.g., at least 75% past or present members of the U.S. Armed Forces). Their purposes include promoting social welfare, assisting needy veterans, providing entertainment/care to hospitalized veterans, perpetuating the memory of veterans, conducting religious/charitable/scientific/literary/educational programs, sponsoring patriotic activities, providing insurance benefits, and offering social/recreational activities for members. Contributions to these organizations are generally tax-deductible.
This page provides an overview of some of the most common 501(c) designations. For a complete list and detailed requirements, always refer to the official IRS website or consult with a qualified legal or tax professional.